Yangarra Resources Limited (Yangarra), a Calgary-based junior gas and oil business, had several properties throughout Alberta consisting of both soley controlled and joint endeavors. The president and chief executive officer (CEO) was involved in the construction of a well on the Ferrier property, a joint venture between three firms each holding about one third of the position. As portion of the joint venture agreement, Yangarra had signed an agreement that committed Yangarra to cover all expenses proportional to its working position of 31.875 per cent.
Yangarra Resources Limited Case Solution
The well had been drilled but at a higher cost than expected with many costs not yet incurred nor charged. As a result of the cost-overruns, Yangarra had been asked to provide more financing to the endeavor. In determining whether to commit additional resources to the Farrier well, the CEO had to consider several factors including an existing gross overriding royalty earnings (GORR) understanding, uncertainty in estimating the recoverable quantity of petroleum, crown royalties plus a present legal dispute.
PUBLICATION DATE: February 16, 2011 PRODUCT #: W11078-PDF-ENG
This is just an excerpt. This case is about TECHNOLOGY & OPERATIONS
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